Electric companies fear a brake on the transfer of customers to free rates when gas is capped

Electricity bill. / CR

With the electricity price limited, the regulated contract will no longer be so expensive after the massive move to stable prices during 2021

Jose Maria Waiter

With the 'Iberian exceptionality' about to come out of the Brussels oven, major changes are looming in the electricity market, beyond the limitation of the cost of gas and the price of electricity. The gap between the 10 million consumers who have a regulated rate and the 19.8 million who have opted for some of the free market offers will widen. In the first case, because they will see the amount of the bill that they have paid so far moderate; and in the second because, as their contracts expire, they will have to incorporate the cost of limiting the price of electricity to the other part of the market.

The massive movement of clients recorded in the last year as a result of the price crisis may not be slowed down, but even paralyzed. Those who are in the regulated market will continue in it, seeing how the price of kWh they pay will no longer be as high as the one they have paid in recent months. In this way, a trend that has not declined in recent months will be largely stagnant: the passage from the regulated rate to the free rate.

That is at least the scenario estimated by electricity market sources consulted by this newspaper. In addition, the 'Iberian exception' will come after the statements this week by the president of Iberdrola, Ignacio Galán, in favor of the free rate and against the regulated one. Joaquín Segura, from Selectra, explains that this measure of the gas cap will mean "a brake on that step to the free market" like the one we have seen since last year.

In fact, last year 1,250,101 households opted for some of the dozens of stable rates offered by marketers and decided to leave the PVPC, after registering continuous cost records. This large number of changes from the regulated to the free market means more than doubling the transfer request between both types of rates in 2020, when it barely exceeded half a million portability. In addition, the figure registered last year by the National Commission for Markets and Competition (CNMC) reveals a record number of rate transfers, compared to 663,000 in 2019 or 737,000 in 2018.

There were also those who went from regulated to free, although they possibly did so in the first part of last year, when pool prices were still relatively low, before they began to pick up since June. Some 428,000 households opted for the regulated rate from one of the free ones.

Stability as an asset

With all these data, there are already 19.8 million supply points in the free market compared to 10 million in the regulated market, its historical minimum. In other words, they already represent less than 33% of the total, when until a year ago they were 40%.

The Competition data indicates that it was in 2014 when the investment in the market took place: the moment in which there was a greater number of households that opted for stable electricity offers in the face of the variability of the PVPC. Since then, the distance between both types of consumers has been widening, despite the fact that the rate change could be in either direction.

In the background of this question are the characteristics that define the regulated tariff in Spain, a unique model in all of Europe. On the one hand, because it is an electricity contract linked directly to the wholesale price of electricity. "It works as if the price of the bus transport subscription was linked to the daily cost of oil," explains Luis del Barrio, of Arthur D. Little. This expert considers that the Spanish regulated rate "should have more fixed long-term prices with a basket of futures products." Although one of its characteristics is that it is the only rate that allows access to the social bonus (the discount of up to 70% for vulnerable households).

A unique model in Europe

In September, the Ministry for the Ecological Transition launched a public consultation to address the reform of the PVPC. But after a few weeks it was parked due to the reluctance of several market agents, such as consumer and user associations, opposed to this measure, since it would imply a greater margin for companies. On the other hand, Luis del Barrio emphasizes that the regulated rate "is too broad", since all consumers (households and businesses) with less than 10kw of contracted power can benefit from it. For a home, the usual is less than 5kw of power. In this way, by having fewer users, "the truly vulnerable could be better protected."

The changes that are coming in the electricity pool, and that may cause a stagnation in the transition from the regulated to the free market, reveal the insistence of the energy sector on the problems that the PVPC continues to pose in Spain. “It is a rate that does not include all the costs that it should assume, such as the need for sufficiency,” explains Pedro González, director of regulation at Aelec. In fact, the marketing margin of this rate is set by law and is less than that of free rates. "It also does not include the cost of the social bonus that the reference marketers had to pay, nor the cost of the face-to-face channel," explains González.

When the cap on gas is in place, and with the new electricity market reference prices in place, the Ministry for Ecological Transition will rethink how to adapt the regulated rate to a new formula for calculating its prices and conditions. This was indicated by the vice president Teresa Ribera in an interview in this newspaper, in which she clarified that, for now, the conditions to do so are not met due to the variability of pool prices.

For example, in Portugal it is calculated as an average of the forward market price and a price forecast made by the regulator. In Great Britain, it is calculated every six months; and in Italy, every quarter, to give stability to the accepted receipts, although it is planned to eliminate it over the next year.

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